AI Drafter 
TaxTMI 
TaxTMI 
2006 (12) TMI 511
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..... A licence is granted under the Act. The licensee is indisputably required to carry out the manufacture or sale of country liquor in terms of the provisions of the Act, rules framed thereunder as also the terms and conditions of the licence. 'Alcohol' has been defined in Rule 2(b) of the Kerela Rectified Spirit Rules, 1972 in the following terms : "Alcohol" means ethyl alcohol of any strength and purity having the chemical composition C2 H2 OH." "Country Liquor" has been defined in Section 3(12) of the Act to mean 'toddy or arrack'. 'Toddy' has been defined in section 3(8) of the Act to mean : "Toddy" means fermented or unfermented juice drawn from coconut, palmyra, date, or any other kind of palm tree." 4. Rules were framed by the State of Kerala in exercise of its rule making power conferred upon it under Section 5 of the Act, pursuant whereto or in furtherance whereof 'Kerala Abkari Shops (Disposal in Auction) Rules, 2002 were framed. Rule 9(2) of the said Rules reads as under : "No toddy other than that drawn from the Coconut Plamyrah or Choondapana palms shall be sold by the licensees. All to....
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....that will be present in a fermented liquor, which is not fortified is only 12% by volume. Because when alcohol reaches this volume, the yeast responsible for the fermentation is destroyed by its own bye-product and no further alcohol formation is possible." 7. Paragraphs 4, 5 and 6 of Chapter X contained in volume II of the Manual read as under : "4. The toddy yield from each kind of tree and the alcoholic strength of toddy varies according to the season of the year, the time during which it is drawn and other attendant circumstances. The daily average yield for Excise Departmental purposes may be taken as 1 = litres per coconut tree, 4 = litres per palmyrah tree and 6 > litres per sago tree. 5. Alcoholic fermentation of toddy which is self generated by the action of wild yeasts starts in the collecting pot itself and this continues for a limited period say a maximum period of 3 days. Subsequent to this, bacterial (acetic) fermentation starts, bringing down the alcohol content. The bacteria and pseudo yeasts are responsible for the rather strong smell of toddy and the acidity developed. If toddy is left over a period of time, (without even any other foreign mat....
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..../or was impossible to be performed. Upon construction of Section 56(b) and Section 57(a), it was opined that having regard to the fact that ethyl alcohol is an essential component or ingredient of toddy, only because percentage of ethyl alcohol found to be more, it would not amount to addition of a foreign ingredient as envisaged under Section 57(a) of the Act. It was, therefore, held : "In the result, the challenge against the vires of Rule 9(2) of the Abkari Shops (Disposal in Auction) Rules, 2002 is repelled. Prosecution proceedings against the Respondents under Section 56(b) of the Abkari Act are not liable to be declared illegal. Proceedings to prosecute the Respondents under Section 57(a) of the Act are quashed." 13. The Division Bench of the High Court in subsequent cases followed its earlier orders. 14. Both the licensees as also the State of Kerala are before us. 15. Mr. K.N. Bhat, the learned Senior Counsel appearing on behalf of the State, would submit that the provisions of Section 57(a), in view of its purport and object must receive a purposive construction as even in a case of fermentation; once the percentage of ethyl alcohol is found to be in exce....
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....regard to the expressions used therein. Rule 9(2) read in its entirety, states the context that thereby what is essentially sought to be prevented is adulteration of toddy. It is aimed at prevention of adulteration. The penal provision contained in first part not only directs that all toddy kept or offered for sale should be of good quality and unadulterated but also provides that nothing shall be added to it to increase its intoxicating power or for any other purpose. If the second part prescribing the contents of the ethyl alcohol in toddy is read in the context of the first part vis-`-vis Section 57(a) of the Act, it would be evident that prohibition is aimed at adulteration by addition of any foreign substance to increase its intoxicating power or for any other purpose. 21. Validity of Rule 9(2), therefore, can be saved if the said provision is read in its entirety and rule of harmonious construction is resorted to. If, however, Rule 9(2) is sought to be invoked even for the purpose of initiating a prosecution as against a licensee even he does not add any foreign substance to it, the same, in our opinion, would render the same ultra vires, as would appear from the discussio....
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....nsee. A subordinate legislation can be questioned on various grounds. It is also well-known that a subordinate legislation would not enjoy the same degree of immunity as a legislative act would. (See Vasu Dev Singh & Ors. v. Union of India & Ors. 2006 (11) SCALE 108). 29. In Kerala Samsthana Chethu Thozhilali Union v. State of Kerala and Others ((2006) 4 SCC 327), this Court while interpreting the provisions of the same Act, opined : "The Rules in terms of sub-section (1) of Section 29 of the Act, thus, could be framed only for the purpose of carrying out the provisions of the Act. Both the power to frame rules and the power to impose terms and conditions are, therefore, subject to the provisions of the Act. They must conform to the legislative policy. They must not be contrary to the other provisions of the Act. They must not be framed in contravention of the constitutional or statutory scheme." 30. It was furthermore held : "Furthermore, the terms and conditions which can be imposed by the State for the purpose of parting with its right of exclusive privilege more or less have been exhaustively dealt with in the illustrations in sub-section (2) of Section ....
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....anical instrument to measure the contents of ethyl alcohol is of no moment. When a subordinate legislation imposes conditions upon a licensee regulating the manner in which the trade is to be carried out, the same must be based on reasonable criteria. A person must have means to prevent commission of a crime by himself or by his employees. He must know where he stands. He must know to what extent or under what circumstances he is entitled to sell liquor. The statute in that sense must be definite and not vague. Where a statute is vague, the same is liable to be struck down. (Hamdard Dawakhana (Wakf) Lal Kuan, Delhi and Another v. Union of India and Others AIR 1960 SC 554). 34. The learned Single Judge although did not deal with the matter in details, but was of the opinion that the statute is not workable. 35. Workability of a statute vis-`-vis the question as to whether it is vague or otherwise must also be considered having regard to the question as to whether it is at all practical. 36. must state that where two interpretations are possible, having regard to the workability or unworkability of a statute, the one which leads to the workability of the statute must be pref....
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.... should interpret it in the manner which will best serve the object sought to be achieved" 42. Here, no two interpretations are possible for upholding the validity of statute. Applying the principle of law as enunciated by this Court in the decisions noticed hereinbefore, no interpretation would make the statute workable or definite and thereafter, valid in law. 43. We are concerned herein with construction of a penal statute. 44. Is it possible for a licensee to apply for renewal of his licnece in terms of Section 57 of the Act is the core question. 45. Toddy ferments automatically after sun rise. If it is permitted to be sold within a timeframe after toddy is tapped, reasonableness can be inferred; but at what point of time precisely ethyl alcohol content would exceed 8.1% in a toddy is not known. It will bear repetition to state that the same would depend upon several factors including the climate. It is reasonable to expect that the State would frame rules in consonance with equity and good conscience. A rule may not be worked out if it imposes a condition which, unless some other guidelines are issued, would become impossible to be performed. We must remind ourselv....
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....y violate rule, but thereby may not adulterate liquor. Whereas violation of the rule may be intentional or unintentional attracting penal provisions of Section 56 of the Act. Violation of the provisions of Section 57 rests on existence of mens rea or actus reus on the part of the offender. In a case where extract of juice is subject to automatic fermentation, one does not have to mix anything for increase of contents of ethyl alcohol. It is not the case of the State that the licensee has deliberately mixed additional ethyl alcohol in the liquor so as to increase the potency thereof. 53. Section 57 provides for graver offence. If one act attracts two offences, the one providing for higher punishment cannot be presumed to apply unless ingredients thereof are satisfied. 54. A penal statute must receive strict construction. Only in exceptional cases the principles of purposive construction shall apply to a penal statute. (See Indian Handicrafts Emporium and Others v. Union of India and Others ((2003) 7 SCC 589) and Balram Kumawat v. Union of India and Others (2003) 7 SCC 628). 55. In this case we are satisfied that the High Court was correct in its view that the ingredients of....
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....the statute to the exclusion of cases which those words in their ordinary acceptation would comprehend. ' But where the thing is brought within the words and within the spirit, there a penal enactment is to be construed, like any other instrument, according to the fair common-sense meaning of the language used, and the court is not to find or make any doubt or ambiguity in the language of a penal statute, where such doubt or ambiguity would clearly not be found or made in the same language in any other instrument'." In Lalita Jalan v. Bombay Gas Co. Ltd. this question was examined in considerable detail and it was held that the principle that a statute enacting an offence or imposing a penalty is to be strictly construed is not of universal application which must necessarily be observed in every case. The Court after referring to Murlidhar Meghraj Loya v. State of Maharashtra, Kisan Trimbak Kothula v. State of Maharashtra, Supdt. and Remembrancer of Legal Affairs to Govt. of W.B. v. Abani Maity and State of Maharashtra v. Natwarlal Damodardas Soni held that the penal provisions should be construed in a manner which will suppress the mischief and advance the object ....
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....uld be denied to him. Consequences of attracting the provisions of Section 57, thus, must also be judged from the said angle. 63. Reliance placed by Mr. Bhat upon Sundaram Pillai (supra), in our opinion, is wholly misplaced. The court therein was considering a rent control statute. It laid down law with regard to the interpretation of 'proviso' and 'explanation'. It was while so doing referred to the well- known decision of Seaford Court Estates Ltd. v. Asher ((1949) 2 All ER 155 : (1969) 2 KB 481 (CA)), stating : "It has been observed that statutory provisions must be so construed, if it is possible, that absurdity and mischief may be avoided. Where the plain and literal interpretation of a statutory provision produced a manifestly absurd and unjust result, the court might modify the language used by the Legislature or even do some violence to it so as to achieve the obvious intention of the Legislature and produce rational construction and just results. See in this connection, the observations in the case of Bhag Mal v. Ch. Parbhu Ram. Lord Denning in the case of Seaford Court Estates Ltd. v. Asher has observed : "if the makers of the Act had ....